▪ Contesting Contested Cases

The Hawaii Supreme Court recently decided a case that provides some guidance to those who practice in the often ill-defined space between executive agencies and the courts, a place land use lawyers and their clients frequently find themselves.

In Hui Kakoo Aina Hoopulapula v. Board of Land and Natural Resources (Sep. 21, 2006), the court confirmed that in order to properly demand a “contested case” (a trial-like administrative hearing) and thus preserve a right to judicial review of agency action, the party demanding the hearing must follow the agency’s rules to request it, even if it appears futile to do so.

In that case, the electric company asked the State Board of Land and Natural Resources for a long-term lease of brackish water from a Big Island aquifer for “industrial use and fire suppression” for a generating plant. 

Parties who have long objected to the generating plant objected to the proposed lease and orally asked the Board for a contested case at a public hearing the Board scheduled on the electric company’s request.  The Board rejected the oral request for a contested case and issued the lease after a public auction.  The objectors did not file a written request for a contested case with the Board, as required by the Board’s rules of procedure.

The objectors then sought judicial review in circuit court of the issuance of the lease, and the denial of the contested case.  Circuit court review of administrative agency action is limited to appellate review of the administrative record produced after a contested case.  Thus, if no contested case is held in the agency, the circuit courts lack subject matter jurisdiction. 

The circuit court, finding that no contested case was conducted by the Board, determined it lacked jurisdiction, and the supreme court affirmed, never reaching the substantive issues raised by the objectors.  Lack of jurisdiction prevented the courts from considering the case at all.

The key holding of the case is that a proper written demand for a contested case is a jurisdictional prerequisite to judicial review.  Even when the agency has denied an oral demand.  The court held that the agency's "no" may not have really meant "no," and the objectors may have been able to change the agency's mind with a written demand for a contested case. 

No demand for a contested case means no contested case is conducted, and no contested case means that a party disappointed with the result of agency action cannot run to court and seek reversal.